Dividing business assets in a divorce adds a unique wrinkle to the process that not everyone is familiar with.
Handling the split often requires additional work, however, carefully addressing the matter can help you achieve a satisfactory outcome.
Our divorce lawyers at Turner Family Law in Greenville, South Carolina, understand the nuances of these cases.
Discover what you should know about how business assets are divided in divorce and how our team can assist you.
How Couples Can Prepare for Dividing Business Assets in a Divorce
Records and documentation are going to be key in getting a favorable judgment. Before heading into negotiations or court dates, gather the following paperwork that can show your stake and role in your business:
- Tax returns
- Bank statements
- Financial statements
- Business agreements
It’s also good to verify that personal and business accounts remain separate during this time. Commingling can eliminate any claims that your business assets are separate property.
Equitable Distribution in South Carolina
The court will not simply split business assets 50/50 in your divorce. South Carolina is an equitable distribution state, so the judge attempts to apportion items fairly instead of equally.
However, you can present evidence to support your preference. You could even work out an arrangement with your soon-to-be ex-spouse on how you want to divide your business assets in a divorce during the proceedings and submit it for approval. Our family law firm can assist you with any of these things.
How are business assets divided in a divorce?
In general, anything you acquired before the marriage and kept separate from your shared assets is separate property, including your business. With sufficient proof, you can usually retain these wholly in your possession.
If you started the business after getting married, the court is more likely to view it as marital property, even if your spouse did not have a direct hand in the company’s operations. That’s because your spouse’s support, financial and otherwise, likely contributed to your success.
If the business is marital property, the court reviews the core factors, such as:
- Your marriage’s length
- Whether either spouse was at fault or engaged in misconduct
- Each spouse’s current income and earning potential
- The physical and mental well-being of each party
- Child support and other post-divorce obligations
With these in mind, the court decides how to divide business assets in your divorce.
How do you determine the value of business assets in a divorce?
There are three common methods for appraisal:
- Income: The company’s value is equal to its projected earning potential, which you calculate using its prior performance and economic formulas.
- Asset: The business is worth the fair market value of all physical and intangible assets minus any liabilities.
- Market: An appraiser assigns a value by considering comparable companies.
A more intricate business model requires the help of a professional, who can also help you decide which valuation method to use.
How Prenuptial and Postnuptial Agreements Affect the Division of Business Assets
Marital agreements are often the ideal way of removing any confusion regarding the division of business assets in a divorce. If you’re preparing for marriage and want to protect your stake in a business, you should explicitly outline these points in a prenuptial agreement.
Even if you did not create a prenuptial agreement before marriage, you could still clarify matters with a postnuptial agreement. This arrangement addresses the same issues as a prenup, but you create it after entering the marriage.
It is of utmost importance to work with an experienced divorce attorney to be sure the document will likely stand up to any challenges in court during the divorce process. Our team at Turner Family Law can help create this document and defend the agreement if necessary.
Ideas for Protecting Intellectual Property Rights
Remember to protect intangible assets you own, including intellectual property rights. The court will review these and could decide to split ownership of them. These include patents, copyrights, trademarks and trade secrets.
As with any other business assets in a divorce, you can safeguard IP by documenting details about when you created them and how. You also should provide any proof of your spouse’s involvement with the creation or maintenance of the IP. Get an official valuation, and then consider negotiating an agreement with your spouse about dividing these assets and any revenue from them.
Possible Splits When Dealing Co-Ownership and Partnerships
When you both clearly have a stake in the business, you can present a few different options for division. In amicable divorces, you could keep your respective shares or ownership and continue to operate the business as before. This tends to be rare as it can present other challenges down the road.
A more common arrangement is for one spouse to buy out the other. You could do this with a cash payment or by trading other assets you split in the divorce. If you don’t wish to continue running the business or can’t find any other agreement, selling the business and splitting the proceeds may be optimal.
Contact Our Skilled Attorneys at Turner Family Law To Handle Your Business Assets in a Divorce
Your divorce doesn’t have to compromise your professional interests. Reach out to our experienced lawyers at Turner Family Law in Greenville, SC today. We’ll guide you through the complicated process of dividing and protecting your business assets in a divorce.
